CERCLA and the Choice Between Pro Tanto and Proportionate Share Settlement Allocation: Looking to the Supreme Court for Guidance

J. Wylie Donald

Editors' Summary: The effect of settlements among private parties in CERCLA contribution suits leaves courts with the choice of allocating liability among the nonsettling parties based on either the pro tanto method, which credits nonsettlors with the amount settling parties have paid, or the proportionate share method, which credits nonsettlors with the settlors' equitable share of cleanup costs. District courts have yet to achieve consensus on which method to adopt. The U.S. Supreme Court's recent admiralty case, McDermott, Inc. v. AmClyde, in which the Court chose the proportionate share rule based on fairness considerations, may provide some guidance. After summarizing McDermott and CERCLA case law thus far, this Article analyzes the respective justifications for adopting the pro tanto or proportionate share approach. The Article concludes that although McDermott's reasoning may be instructive, the unique nature of CERCLA litigation may require a different result depending on the circumstances.

J. Wylie Donald is an associate in the Environmental Law Group at McCarter & English in Newark, New Jersey. Mr. Donald thanks John A. McKinney Jr. for his insight and comments in preparing this Article, and Diane F. Janko for her invaluable assistance in completing the manuscript. The opinions expressed herein are solely the author's.

[25 ELR 10293]

The effect of a settlement among private parties in a Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)¹ contribution action on the nonsettling parties' eventual liability poses a nettlesome question. Upwards of a dozen district courts have addressed the issue, yet have not achieved consensus. Central to resolving the problem is determining which rule of allocation courts should adopt:² The pro tanto rule, which credits nonsettling parties with the amount paid by settling parties³ or the proportionate share rule, which credits nonsettlors with the settlors' equitable share of cleanup costs, regardless of the settlement amount.⁴

The U.S. Circuit Courts of Appeal thus far have been silent on the issue. Recently, however, in McDermott, Inc. v. AmClyde,⁵ the U.S. Supreme Court clearly stated that a proportional rule is preferred in admiralty law because of the unfairness of a pro tanto allocation. This decision could have an impact on CERCLA cases because courts have often used the Supreme Court's admiralty decisions as guidance [25 ELR 10294] in developing a federal common law for CERCLA.⁶ Because a uniform federal common law for CERCLA jurisprudence is desirable,⁷ it may be appropriate to look to McDermott for guidance in choosing between the pro tanto and proportionate share methods of allocation.

The purpose of this Article is not to choose between the pro tanto and proportionate share rules based on CERCLA case law. Others have capably accomplished such analysis.⁸ Rather, after summarizing McDermott and setting out the arguments CERCLA courts have used for and against the pro tanto and proportionate share rules, the Article compares the justifications for adopting the proportionate share approach in McDermott with the arguments district courts have considered in CERCLA cases. To assist counsel in framing arguments that may, in time, result in a single rule in CERCLA cases, the Article concludes that although the proportionate share rule in McDermott may be appropriate in some CERCLA cases, the unique nature of CERCLA litigation may require a different result in others.

McDermott, Inc. v. AmClyde: The Proportionate Share Rule in Admiralty Law

In McDermott, the petitioner had sued respondents AmClyde and River Don Castings for damages sustained in a crane accident on the petitioner's oil platform. Several other defendants had settled before trial collectively for $ 1 million. After trial the jury assessed the petitioner's damages at $ 2.1 million and allocated 32 percent and 38 percent of the damages to AmClyde and River Don Castings, respectively. The trial court denied the respondents' motion to reduce the $ 2.1 million judgment pro tanto by the $ 1 million settlement. The U.S. Court of Appeals for the Fifth Circuit reversed and applied the pro tanto rule.⁹ The issue for the Supreme Court was "whether the liability of the nonsettling defendants should be calculated with reference to the jury's allocation of proportionate responsibility, or by giving the nonsettling defendants a credit for the dollar amount of the settlement."¹⁰

The starting point for the Court's analysis was its earlier decision in United States v. Reliable Transfer Co.¹¹ There the Court had discarded the "divided damages rule" — an old admiralty rule governing collisions that assessed damages equally between culpable parties regardless of their relative degree of fault. Although the old rule was simple to apply, "the interest in certainty and simplicity [it] served . . . was outweighed by the interest in fairness promoted by the proportionate fault rule" that the Court adopted instead.¹²

The Court next looked to the Restatement (Second) of Torts for guidance in determining how to credit nonsettling defendants for settlements entered into by their joint tortfeasors. Focusing on Restatement § 886A, the Court identified three options:

(1) The money paid extinguishes any claim that the injured party has against the party released and the amount of his remaining claim against the other tortfeasor is reached by crediting the amount received; but the transaction does not affect a claim for contribution by another tortfeasor who has paid more than [its] equitable share of the obligation. [Alternative 1]

(2) The money paid extinguishes both any claims on the part of the injured party and any claim for contribution by another tortfeasor who has paid more than [its] equitable share of the obligation and seeks contribution. . . . [Alternative 2]

(3) The money paid extinguishes any claim that the injured party has against the released tortfeasor and also diminishes the claim that the injured party has against the other tortfeasors by the amount of the equitable share of the obligation of the released tortfeasor. [Alternative 3]¹³

The Court noted that in both Alternatives 1 and 2, "the amount of the injured party's claim against the [nonsettling defendants] is calculated by subtracting the amount of the settlement from the plaintiff's damages."¹⁴ The Court characterized both these alternatives as using some form of the pro tanto approach.¹⁵ Under Alternative 3, which the Court described as the proportionate approach,¹⁶ regardless of the plaintiff's settlements with any defendants, "the nonsettling defendants [would] pay no more than their share of the judgment."¹⁷

[25 ELR 10295]

With that as background the Court then identified three "paramount" factors: First, was the approach chosen consistent with Reliable Transfer's proportionate fault approach? Second, did the approach promote settlement? Third, did the approach promote judicial economy?¹⁸

The Court quickly dismissed Alternative 1 (pro tanto with right of contribution). Because the settling party was not protected from contribution suits, the incentive to settle was greatly reduced. Also, contribution suits would further encumber the courts.¹⁹ The Court characterized the choice between Alternative 2 (pro tanto) and Alternative 3 (proportionate share), however, as being closer.

The proportionate share approach was clearly consistent with Reliable Transfer.²⁰ Pro tanto allocation, however, was unlikely to reflect proportionate fault.

Under the pro tanto approach, . . . a litigating defendant's liability will frequently differ from its equitable share, because a settlement with one defendant for less than its equitable share requires the nonsettling defendant to pay more than its share. Such deviations from the equitable apportionment of damages will be common, because settlements seldom reflect an entirely accurate prediction of the outcome of a trial.²¹

Further, "the settlement figure is likely to be less than the settling defendant's equitable share . . ., because settlement reflects the uncertainty of trial" and a plaintiff would be willing to settle for a lower amount in order to build a "war chest."²²

The Court acknowledged trial courts' attempts to guard against unfairness in settlements through the use of "good-faith" hearings, but doubted their efficacy.²³ To prevent unfairness effectively, good-faith hearings would have to be "mini-trials on the merits, but in practice they are often quite cursory."²⁴ More importantly, any settlement that took into account the uncertainty of trial would necessarily be unfair to the nonsettling defendant and consequently would be inconsistent with Reliable Transfer.²⁵ The Court concluded that "the pro tanto approach, even when supplemented with good-faith hearings, is likely to lead to inequitable apportionments of liability, contrary to Reliable Transfer."²⁶

The Court next considered the respective effects of the pro tanto and proportionate share rules on settlements and found them to be "ambiguous."²⁷ The pro tanto rule "encourages settlement by giving the defendant that settles first an opportunity to pay less than its fair share of the damages."²⁸ "Threatened" with "the prospect of paying more than [their] fair share," the nonsettling defendants are pressured to settle.²⁹ The Court concluded that such "additional pressure to settle is unnecessary" in light of the "parties' desire to avoid litigation costs, to reduce uncertainty, and to maintain ongoing commercial relationships."³⁰ The Court found that the proportionate share approach would witness a similar "high settlement rate" based on those factors.³¹ Further, the Court was not willing to accept "any conclusion that the pro tanto rule generally encourages more settlements," stating that "practical considerations may be more significant than stark hypotheticals."³² In conclusion, the Court stated that "[t]he additional incentive to settlement provided by the pro tanto rule comes at too high a price in unfairness."³³

The Court also found "[t]he effect of the two rules on judicial economy [to be] ambiguous."³⁴ Under both rules "the relative fault of the [settling] parties will have to be determined," either in a good-faith hearing under the pro tanto rule, or in a trial on the merits under the proportionate share rule.³⁵ Although the "cursory nature of most good-faith hearings" may save judicial time, "there is reason to believe that reserving the apportionment of liability for trial may save more time."³⁶ All parties "may settle before trial, thus making any determination of relative culpability unnecessary."³⁷ Further, because the role of the settling defendants, even under the pro tanto rule, may be argued in the trial on the merits (either to establish the context of the action or to cast liability on the settling parties), "the pro tanto rule has no clear advantage with respect to judicial economy."³⁸

Thus, the Supreme Court in McDermott, while finding the advantages of the pro tanto and proportionate share rules ambiguous with respect to advancing settlement and supporting judicial economy, chose the proportionate share rule to govern the allocation of the settling parties' payment because the pro tanto rule, even with good-faith hearings, was likely to lead to inequitable results.

CERCLA Case Law Considering the Two Approaches

Although district courts originally seemed to favor the proportionate share approach over the pro tanto method,³⁹ case law since 1993 has been closer regarding which method to [25 ELR 10296] use to determine the amount with which to credit nonsettling defendants in a private-party CERCLA action.⁴⁰

The Proportionate Share Rule

The leading case applying the proportionate share rule is United States v. Western Processing Co.⁴¹ In Western Processing, third-party plaintiffs, who were conducting a CERCLA cleanup, sought judicial approval of 26 settlements entered into with third-party defendants, as well as a finding that settlement amounts represented each party's equitable share of the cleanup costs. The court's decision relied heavily on the following analysis of the relative advantages and disadvantages of the proportionate share and pro tanto rules contained in an article in the Gonzaga Law Review.⁴²

The proportionate share approach's advantages are that it

(1) provides for equitable apportionment of responsibility, and where there is a partial settlement, the judgment is reduced by the proportionate fault of the settling defendant who is then discharged;

(2) complex partial settlements involving multiple parties, claims, or theories are more easily resolved (without the imprecision of allocation prior to trial by the court under the pro tanto theory);

(3) the need for a good faith hearing is eliminated as the proportionate credit is not based on the amount of the settlement;

(4) total settlement is encouraged after partial settlement as a culpable nonsettlor cannot escape responsibility when a settling defendant pays more than [its] fair share and cannot gamble on a jury verdict in view of a guaranteed credit; this serves also to deter wrongful conduct.⁴³

Its disadvantages are that

(1) recovery of the exact amount of the total damages set by the trier of fact is entirely fortuitous when there has been partial settlement, as the nonsettlors pay only their fair share regardless of the amount of settlements paid; this can lead to

(2) impairment of a claimant's willingness to settle because of the uncertainty of the amount to be credited for the settlements;

(3) at trial, a plaintiff must not only advocate [its own] freedom from fault, but also convince the trier of fact of the settlor['s] minimal fault. In complex cases the plaintiff may not have access to information that the settling defendant would have had, and a distortion could result from the settlor not defending [the settlor's] own interest.⁴⁴

Other reasons for choosing the proportionate share approach include: The establishment of "a uniform federal rule [would allow] consistent principles of contribution and allocation of damages [to] develop in CERCLA actions";⁴⁵ the proportionate share approach would ensure that nonsettlors are not forced to absorb the shares of insolvent parties;⁴⁶ the pro tanto approach's requirement of fairness hearings, particularly in cases involving small settlement amounts, would greatly reduce the benefits of settlement;⁴⁷ and CERCLA § 113(f)(1) provides that courts may use equitable factors to allocate response costs among liable parties.⁴⁸

The Pro Tanto Approach

The most well-reasoned decision applying the principles of the pro tanto approach to CERCLA contribution suits between private parties is Atlantic Richfield Co. v. American Airlines, Inc.⁴⁹ In Atlantic Richfield, the court acknowledged that "the majority of courts [facing the] issue have applied the proportionate rule."⁵⁰ Nevertheless, holding it had discretion to choose, the court concluded that on "consideration of all the facts and circumstances of this particular case, . . . the pro tanto rule is superior to the proportionate rule in this instance."⁵¹

As the basis for its conclusion, the court relied on the analysis in the report and recommendation of the magistrate [25 ELR 10297] assigned to oversee the litigation.⁵² From the magistrate's perspective, the proportionate rule was inappropriate for complex, multiparty litigation that cannot be settled all at once.⁵³ In the case before him, plaintiff Atlantic Richfield (ARCO) had entered into a consent decree with the government to clean up hazardous waste at the Sand Springs Petrochemical Complex Superfund Site. ARCO then sued approximately 400 other parties to recover its response costs. Through settlement, the number of defendants was reduced to about 60. De minimis settlements were made based on the volume of materials brought to the site, and, in some instances, on volume and inability to pay.⁵⁴

ARCO moved for an order basing its future recovery on the pro tanto rule. The nonsettling defendants opposed the motion, arguing that the proportionate rule was more appropriate for several reasons. First, the pro tanto rule forces the nonsettling parties to bear "the consequences of proceeding to trial."⁵⁵ Second, it is inequitable because it does not consider fault. Third, "it impedes total settlement because non-settling parties have a known 'buffer'" that may encourage taking a chance on a trial.⁵⁶ Fourth, the pro tanto rule "encourages collusion among defendants."⁵⁷ Fifth, the proportionate rule is "easier to apply because it does not require fairness hearings."⁵⁸ Last, "the majority of courts in CERCLA cases have applied [the proportionate] rule."⁵⁹

The magistrate conducted a thorough examination of the case law supporting either the proportionate rule or the pro tanto rule. He distinguished the cases adopting the proportionate share approach from the case at bar and then set out his reasons for adopting the pro tanto approach. First,

the proportionate rule makes partial settlement enormously difficult. No matter how many parties settle, [the proportionate rule] still contemplates a full-blown trial, where the proportionate responsibility of every remaining and former party to the litigation is determined. The trial task becomes more difficult, and contested fact issues are multiplied, instead of reduced.⁶⁰

Second, where nonsettling parties remain jointly and severally liable for all of plaintiff's unknown total costs, "[t]he practical effect [of the pro tanto rule] . . . is to increase the risk the longer a defendant stays in the suit, creating a strong incentive for earlier and/or universal settlement."⁶¹ Thus, once one party reaches a settlement, nonsettlors have an increased incentive to settle as well to avoid being "stuck" with more than their share.

Third, that the pro tanto rule requires the use of fairness hearings is not an obstacle, because such proceedings "need not be long and arduous, as the law requires only that a fair and reasonable compromise be demonstrated."⁶² Fourth, using the proportionate rule would not comport with the defendants' joint and several liability for plaintiff's § 107 cost recovery claim in that nonsettling defendants would then enjoy only several, rather than joint and several, liability.⁶³

Last, as evidenced by the Civil Justice Reform Act,⁶⁴ public policy supports lowering costs and expediting proceedings through "effective case management and settlement."⁶⁵ Thus, "[t]he mandate of Congress to reduce expense and delay in [CERCLA] cases demands analysis of each rule and its practical impact."⁶⁶

For all these reasons, therefore, the magistrate adopted the pro tanto approach as "clearly superior" to the proportionate approach.⁶⁷

Applying McDermott to Settlements Under CERCLA

The Supreme Court in McDermott, finding that the respective advantages and disadvantages of the pro tanto and proportionate share approaches regarding promoting settlement and judicial efficiency did not clearly lead to the conclusion that one approach was superior to the other, relied on the precepts of fairness inherent in its earlier decision in Reliable Transfer Co. as the primary basis for its decision.⁶⁸ To the extent that district courts in CERCLA cases have made arguments for or against the pro tanto or proportionate share approach, the Supreme Court's conclusion may provide guidance for future decisions on this issue. On the other hand, because of the nature of CERCLA litigation, other bases for district courts' decisions may remain open.

Considering the five points on which the court in Atlantic Richfield based its decision,⁶⁹ the McDermott opinion suggests that the first and third points dealing with promotion of settlement and fairness hearings are ambiguous in their implications for choosing one approach or the other. Whether that ambiguity would actually exist in a CERCLA case, however, is uncertain. McDermott only involved a few parties. In the typical CERCLA case, in which dozens or even hundreds of parties may be joined, McDermott's "paramount considerations"—the promotion of settlement and judicial economy—take on a different cast.

The Supreme Court in McDermott explicitly rejected the Atlantic Richfield court's second point—namely, that the pro tanto approach increases nonsettlors' incentive to settle by increasing the risk. The Court noted that such an "additional [25 ELR 10298] incentive to settlement comes at too high a price in unfairness."⁷⁰ Yet one of the settlement incentives that the Court relied on—the maintenance of ongoing commercial relationships⁷¹ —generally, is not present in CERCLA cases. Thus, in the CERCLA context, additional settlement incentives may be necessary, even if they are unfair.

The fourth point, however, cannot be easily dismissed. If CERCLA cases are fundamentally different from other cases involving jointly and severally liable defendants, then it is possible to override in CERCLA cases the concepts of fairness that McDermott found central. Some courts have held that CERCLA § 107 cost recovery claims are not identical to § 113 contribution claims.⁷² This implies that a private party, suing under § 107, may be in a position to recover all of its cleanup costs from any jointly and severally liable defendant, despite the plaintiff's own liability.⁷³ If this is so and CERCLA is meant to be "unfair"—so as to expedite cleanups, perhaps—then application of McDermott may be misplaced.

Finally, although the Supreme Court would not abide "a legal rule [such as the pro tanto rule] that produces unjust results in litigation simply to encourage speedy out-of-court accommodations,"⁷⁴ the Civil Justice Reform Act's preference for reducing expense and delay is more than a "legal rule" and should not be summarily dismissed, particularly in extensive, multiparty CERCLA cases.

Following the same line of reasoning, the Gonzaga Law Review analysis may be similarly dissected. Claimed advantages or disadvantages concerning ease or encouragement of settlement, absence of good-faith hearings, impairment of claimants' willingness to settle, and distortion of trial, probably would not convince the Supreme Court in a CERCLA case involving only a few parties. As more parties became involved, however, the impact of those factors on the promotion of judicial economy and settlement could become decisive.

McDermott did not expressly consider the argument that the plaintiff's recovery of the exact amount of damages set by the trier of fact is fortuitous under the proportionate share approach, although presumably the Court was aware of this implication. The opportunity for fortuity increases in a complex, multiparty CERCLA case, where settlement may occur in phases. In such cases, the need for fairness to the plaintiff may counter the fairness to the defendants that the McDermott analysis found to be primary.

The last Gonzaga Law Review advantage—"equitable apportionment of responsibility" —is central to the Supreme Court's analysis in McDermott and would be the primary reason to adopt the proportionate approach in CERCLA cases. Such language mirrors the Court's emphasis on the "equitable apportionment of damages" and the need to avoid "inequitable apportionments of liability."

One must also consider the other reasons district courts have enumerated for choosing the proportionate approach. The need for a uniform federal rule, though valid, presumes that each choice is equivalent and that a court could validly choose either approach. If the McDermott analysis applies in CERCLA cases, however, the proportionate share approach is the better choice and therefore should be the rule even if that choice is inconsistent with prior decisions of other federal courts. Second, ensuring that insolvent parties' shares are allocated to both settlors and nonsettlors is clearly consistent with McDermott. But fairness hearings could also accomplish such allocation should a court choose to apply the pro tanto rule. Third, as mentioned above, the need for fairness hearings is probably not conclusive one way or the other, even when many of the settlements are with minor participants.⁷⁵

Finally, CERCLA's provision that courts may use equitable factors to allocate response costs among liable parties may indicate that McDermott's emphasis on fairness is inapplicable to CERCLA cases. Courts have construed those equitable factors to include the potentially liable party's degree of cooperation with governmental authorities⁷⁶ as well as the party's financial status.⁷⁷ It is not clear that such "equitable factors" are necessarily congruent with the Supreme Court's concept of "equitable share."

Conclusion

In McDermott, Inc. v. AmClyde, the Supreme Court found that the respective advantages and disadvantages of the pro tanto and proportionate share methods were closely matched with respect to the promotion of both settlement and judicial economy. The proportionate share approach was clearly superior, however, in that it promoted fairness to a higher degree.

Although the Court decided McDermott under its admiralty jurisdiction, the Court's emphasis on fairness may also apply in other areas of the law such as CERCLA. In considering whether to apply the pro tanto or proportionate share approach in CERCLA cases, district courts have, in a majority of cases and for a variety of reasons, opted for the proportionate share approach. Other courts have chosen the pro tanto method. The McDermott decision shows that substantial portions of the courts' analyses, at least in cases involving few parties, are secondary to the paramount concern with fairness. Yet even that concern may be deflected as a result of certain attributes of CERCLA litigation. Three [25 ELR 10299] attributes that bear additional consideration concern the application of McDermott to complex multiparty litigation, the implications of joint and several liability in private-party cost-recovery actions, and the coextensiveness of CERCLA's "equitable factors" and the Supreme Court's concept of "equitable fault." McDermott's adoption of the proportionate share rule is clearly relevant to CERCLA cases, but it remains to be seen whether it will be controlling.

1. Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§ 9601-9675, ELR STAT. CERCLA §§ 101-405.

2. Note that this choice does not apply to settlements with state or federal governments. See infra note 40.

3. Section 4 of the Uniform Contribution Among Tortfeasors Act exemplifies the pro tanto approach:

When a release or a covenant not to sue or not to enforce judgment is given in good faith to one of two or more persons liable in tort for the same injury or the same wrongful death: (a) It does not discharge any of the other tortfeasors from liability for the injury or wrongful death unless its terms so provide; but it reduces the claim against the others to the extent of any amount stipulated by the release or the covenant. . . .

UNIF. CONTRIBUTION AMONG TORTFEASORS ACT § 4, 12 U.L.A. 98 (1975) (emphasis added).

4. Section 6 of the Uniform Comparative Fault Act exemplifies the proportionate share rule:

A release, covenant not to sue, or similar agreement entered into by a claimant and a person liable discharges that person from all liability for contribution, but it does not discharge any other persons liable upon the same claim unless it so provides. However, the claim of the releasing person against other persons is reduced by the amount of the released person's equitable share of the obligation, determined in accordance with the provisions of Section 2[of the Act].

UNIF. COMPARATIVE FAULT ACT § 6, 12 U.L.A. 57 1993)(emphasis added).

5. 114 S. Ct. 1464 (1994).

6. E.g., Joslyn Manufacturing Co. v. T.L. James & Co., 893 F.2d 80, 83 (5th Cir. 1990) (citing Edmonds v. Compagnie Generale Transatlantique, 99 S. Ct. 2753, 2759 (1979) (theory of statutory interpretation)); United States v. Monsanto Co., 858 F.2d 160, 171-72 (4th Cir. 1988) (citing Edmonds, 99 S. Ct. at 2756 n.8 (theory of divisibility)); see also Akzo Coatings, Inc. v. Aigner Corp., 30 F.3d 761, 769, 24 ELR 21254, 21258 (7th Cir. 1994) (McDermott's policy considerations "informed" court's construction of consent decree).

7. See Lyncott Corp. v. Chemical Waste Management, Inc., 690 F. Supp. 1409, 1417 (E.D. Pa. 1988) (listing cases supporting the need for a uniform rule on the issue of allocation of damages in CERCLA actions). Although Congress hasexpressly provided for the use of the pro tanto method in settlements with the government, see supra note 2, it has not indicated which law should govern the choice of allocation method in settlements between private parties. In the choice between pro tanto and proportionate share allocation in CERCLA cases, district courts agree that state laws governing the shares of nonsettling parties do not apply, but that federal common law does apply. See Barton Solvents, Inc. v. Southwest Petro-Chem, Inc., 834 F. Supp. 342, 348 (D. Kan. 1993); Allied Corp. v. Acme Solvents Reclaiming, Inc., 771 F. Supp. 219, 223 (N.D. Ill. 1990); Comerica Bank-Detroit v. Allen Indus., Inc., 769 F. Supp. 1408, 1414 (E.D. Mich. 1991); Edward Hines Lumber Co. v. Vulcan Materials Co., No. 85 C 1142, 1987 WL 27368 at *3 n.2 (N.D. Ill. Dec. 4, 1987). Because federal common law implements the federal Constitution and statutes, see D'Oench, Duhne & Co. v. FDIC, 315 U.S. 447, 472 (1942), consistency promotes the legitimacy of the entire judicial system.

8. See, e.g., Joseph A. Fischer, All CERCLA Plaintiffs Are Not Created Equal: Private Parties, Settlements, and the UCATA, 30 HOUS. L. REV. 1979 (1994); Elizabeth F. Mason, Contribution, Contribution Protection, and Non-Settlor Liability Under CERCLA: Following Laskin's Lead, 19 B.C. ENVTL. AFF. L. REV. 73 (1992); Steven B. Russo, Contribution Under CERCLA: Judicial Treatment After SARA, 14 COLUM. J. ENVTL. L. 267 (1991); Superfund Settlement: The Failed Promise of the 1986 Amendments, 74 VA. L. REV. 123 (1988); A Right of Contribution Under CERCLA: The Case for Federal Common Law, 71 CORNELL L. REV. 668 (1986); The Right to Contribution for Response Costs Under CERCLA, 60 NOTRE DAME L. REV. 345 (1985).

9. McDermott, Inc. v. Clyde Iron, 979 F.2d 1068, 1079-81 (5th Cir. 1992).

10. McDermott, Inc. v. AmClyde, 114 S. Ct. at 1463.

11. 421 U.S. 397 (1975).

12. McDermott, 114 S. Ct. at 1465.

13. Id. (citing RESTATEMENT (SECOND) OF TORTS § 886A (1977)).

14. McDermott, 114 S. Ct. at 1465-66.

15. Alternative 1 corresponds to the 1939 Uniform Contribution Among Tortfeasors Act, 12 U.L.A. 57-59 (1975). Alternative 2 corresponds to the 1955 Revised Uniform Contribution Among Tortfeasors Act, 12 U.L.A. 63-107 (1975).

16. Alternative 3 corresponds to the 1977 Uniform Comparative Fault Act, 12 U.L.A. 45-61 (1993).

17. McDermott, 114 S. Ct. at 1466.

18. Id. at 1466-67.

19. Id. at 1467.

20. Id.

21. Id. (footnote omitted).

22. Id.

23. Id. at 1467-68.

24. Id. at 1468 (citing cases).

25. Id.

26. Id.

27. Id.

28. Id.

29. Id.

30. Id. at 1468-69. Significantly, the Court supported its reasoning by noting that "less than five percent of [all] cases filed in federal court [actually go to] trial." Id. at 1469 n.22. It thus did not restrict this analysis to admiralty cases.

31. Id. at 1469.

32. Id.

33. Id. "Congestion in the courts cannot justify a legal rule that produces unjust results in litigation simply to encourage speedy out-of-court accommodations." Id. at 1469 n.23 (quoting United States v. Reliable Transfer Co., 421 U.S. 397, 408 (1975)).

34. McDermott, 114 S. Ct. at 1469.

35. Id.

36. Id.

37. Id.

38. Id. at 1469-70.

39. Approving the proportionate share approach: Comerica Bank-Detroit v. Allen Indus., Inc., 769 F. Supp. 1408 (E.D. Mich. 1991); Allied Corp. v. Acme Solvents Reclaiming, Inc., 771 F. Supp. 219 (N.D. Ill. 1990); United States v. Western Processing Co., 756 F. Supp. 1424, 21 ELR 20858 (W.D. Wash. 1990); Lyncott Corp. v. Chemical Waste Management, Inc., 690 F. Supp. 1409 (E.D. Pa. 1988); Edward Hines Lumber Co. v. Vulcan Materials Co., No. 85 C 1142, 1987 WL 27368 (N.D. Ill. Dec. 4, 1987); and United States v. Conservation Chem. Co., 628 F. Supp. 391, 17 ELR 20158 (W.D. Mo. 1985). Approving the pro tanto approach: Allied Corp. v. Frola, 730 F. Supp. 626, 20 ELR 21193 (D.N.J. 1990).

40. Choosing the pro tanto approach: Atlantic Richfield Co. v. American Airlines, Inc., 836 F. Supp. 763 (N.D. Okla. 1993); City and County of Denver v. Adolph Coors Co., 790 F. Supp. 731 (D. Colo. 1993).

Choosing the proportionate share approach: Hillsborough County v. A&E Road Oiling Serv., Inc., 853 F. Supp. 1402, 24 ELR 21569 (M.D. Fla. 1994); Barton Solvents, Inc. v. Southwest Petro-Chem, Inc., 834 F. Supp. 342 (D. Kan. 1993); United States v. SCA Servs. of Ind., Inc., 827 F. Supp. 526, 24 ELR 20086 (N.D. Ind. 1993); American Cyanamid Co. v. King Indus., Inc., 814 F. Supp. 215, 23 ELR 20919 (D.R.I. 1993).

Note that the line of cases applying the pro tanto approach to settlements entered into with state or federal governments does not apply to this analysis in light of CERCLA's explicit statutory authority requiring application of the pro tanto approach in such cases. CERCLA § 113(f)(2) provides:

A person who has resolved its liability to the United States or a State in an administrative or judicially approved settlement shall not be liable for claims for contribution regarding matters addressed in the settlement. Such settlement does not discharge any of the other potentially liable persons unless its terms so provide, but it reduces the potential liability of the others by the amount of the settlement.

42 U.S.C. § 9613(f)(2), ELR STAT. CERCLA § 113(f)(2) (emphasis added). See also United States v. Rohm & Haas Co., 721 F. Supp. 666, 678, 20 ELR 20127, 20131-32 (D.N.J. 1989).

41. 756 F. Supp. 1424, 21 ELR 20858 (W.D. Wash. 1990).

42. Washington's Unique Approach to Partial Tort Settlements: The Modified Pro Tanto Credit and the Reasonableness Hearing Requirement, 20 GONZ. L. REV. 69 (1984-85). Other district courts have relied on Western Processing's analysis. See, e.g., Hillsborough County v. A&E Road Oiling Serv., Inc., 853 F. Supp. 1402, 1408-09, 24 ELR 21569, 21570 (M.D. Fla. 1994); Barton Solvents, Inc. v. Southwest Petro-Chem, Inc., 834 F. Supp. 342, 348 (D. Kan. 1993); United States v. SCA Servs. of Ind., Inc., 827 F. Supp. 526, 534-35, 24 ELR 20086, 20090 (N.D. Ind. 1993). See also American Cyanamid Co. v. King Indus., Inc., 814 F. Supp. 215, 217, 23 ELR 20919, 20920 (D.R.I. 1993).

43. Western Processing, 756 F. Supp. at 1430-31, 21 ELR at 20860-61 (citing 20 GONZ. L. REV. at 101-03).

44. Id. at 1431, 21 ELR at 20861 (citing 20 GONZ. L. REV. at 103-05).

45. Id. at 1432, 21 ELR at 20861 (citing Lyncott Corp. v. Chemical Waste Management, Inc., 690 F. Supp. 1409, 1417 (E.D. Pa. 1988)).

46. Lyncott Corp., 690 F. Supp. at 1418 (citation omitted).

47. Barton Solvents, Inc. v. Southwest Petro-Chem, Inc., 834 F. Supp. 342, 349 (D. Kan. 1993).

48. 42 U.S.C. § 9613(f)(1), ELR STAT. CERCLA § 113(f)(1). See also Western Processing, 756 F. Supp. at 1432, 21 ELR at 20861.

49. 836 F. Supp. 763 (N.D. Okla. 1993).

50. Id. at 766. Besides adopting the minority position favoring the pro tanto rule, the court also moved against the current by declaring the choice between pro tanto and proportionate approaches as best left to the court's discretion. Id. at 765. Other courts considering the issue have opted for the proportionate share approach in order to develop a uniform federal common law. See supra note 7.

51. Atlantic Richfield, 836 F. Supp. at 766.

52. The magistrate, U.S. Magistrate Judge Wagner, was a veteran of settlement proceedings who had handled over 800 settlement conferences. Id. at 775.

53. Id.

54. Id. at 768.

55. Id. at 769.

56. Id.

57. Id.

58. Id.

59. Id.

60. Id. at 775. Further, a plaintiff operating under the proportionate rule must seek to minimize its damages with respect to the settling parties, a task complicated by the fact that those parties are no longer present in the litigation. Id.

61. Id.

62. Id. In Atlantic Richfield the hearings were "simple and straightforward," with "virtually no opposition." There were "no objections" because "the remaining defendants [knew] the settlements [were] fair and at least roughly based on proportionate liability or other legitimate considerations, such as inability to pay." Id.

63. Id. at 775-76. It would not, however, be inconsistent with plaintiff's § 113 contribution claim. Id. & n.16. In a contribution action, a court may use equitable factors to allocate response costs among liable parties. 42 U.S.C. § 9613(f)(1), ELR STAT. CERCLA § 113(f)(1).

64. 28 U.S.C. §§ 471-482.

65. Atlantic Richfield, 836 F. Supp. at 777.

66. Id.

67. Id.

68. McDermott v. AmClyde, 114 S. Ct. 1464, 1470 (1994).

69. See supra text accompanying notes 60-67.

70. McDermott, 114 S. Ct. at 1469.

71. Id. at 1468-69.

72. Case law is divided on whether a private-party cost recovery action brought under § 107(a) is solely an action for contribution under § 113(f). See, e.g., Akzo Coatings, Inc. v. Aigner Corp., 30 F.3d 761, 24 ELR 21254 (7th Cir. 1994) (cost recovery claim is one for contribution); accord Amoco Oil Co. v. Borden, Inc., 889 F.2d 664, 20 ELR 20281 (5th Cir. 1989). Contra United States v. SCA Servs. of Ind., Inc., 849 F. Supp. 1264, 24 ELR 21437, reh'g denied, 865 F. Supp. 533 (N.D. Ind. 1994).

73. See, e.g., United States v. SCA Servs. of Ind., Inc., 849 F. Supp. 1264, 24 ELR 21437, reh'g denied, 865 F. Supp. 533 (N.D. Ind. 1994) (allowing potentially liable party to bring both § 107 and § 113 actions to recover costs). Contra United Technologies Corp. v. Browning-Ferris Indus., Inc., 33 F.3d 96, 24 ELR 21356 (1st Cir. 1994) (CERCLA liable party may only bring § 113 contribution action).

74. McDermott, 114 S. Ct. at 1469 n.23 (quoting United States v. Reliable Transfer Co., 421 U.S. 397, 408 (1975)).

75. For example, the court in Atlantic Richfield Co. v. American Airlines, Inc., found fairness hearings not to be an obstacle for numerous de minimis settlements. 836 F. Supp. 763, 775 (N.D. Okla. 1993). On the other hand, the court in Barton Solvents, Inc. v. Southwest Petro-Chem, Inc., found that such hearings would greatly reduce the benefits of settlements. 834 F. Supp. 342, 349 (D. Kan. 1993).

76. This is the sixth of the "Gore factors." See United States v. A&F Materials Co., 578 F. Supp. 1249, 1256, 14 ELR 20105, 20108 (S.D. Ill. 1984).

77. United States v. R.W. Meyer, Inc., 932 F.2d 568, 572, 21 ELR 21062 (6th Cir. 1991).